Annotate this Case

1911 OK 526
119 P. 968
Case Number: ___
Decided: 07/11/1911
Supreme Court of Oklahoma



¶0 The G. C. Rural Telephone Company petitioned the Corporation Commission for an order requiring the P. T. & T. Company to receive and transmit its messages without delay or discrimination, and to make connection with its line under proper rules and regulations. The Commission entered an order requiring such physical connection, and the transmission of messages. This order, as modified, is affirmed.

Appeal from the State Corporation Commission.

Petition of the Grant County Rural Telephone Company and others to compel the Pioneer Telephone & Telegraph Company to physically interconnect its plant with that of petitioner. From an order of the Corporation Commission granting the petition, the Pioneer Telephone & Telegraph Company appeals. Modified and affirmed.

Hunt Chipley (Edward P. Meany, Henry E. Asp, and S. H. Harris, on the brief), for appellant. Chas. West (C. J. Davenport, on the brief), for appellees.


¶1 This is an appeal from the order of the Corporation Commission, made and entered on the 13th day of August, 1909, in which the appellant is directed to physically interconnect its telephone plant with that of the appellee company, and thereafter to receive and transmit its messages without delay and discrimination.

¶2 The appellant is engaged in a general public telephone business throughout the state, furnishing exchange telephone service from various exchange plants located in many cities and towns within the state, including the city of Pond Creek, and also furnishing toll or long-distance service over its toll or long-distance lines constructed generally throughout the state, including toll or long-distance service to and from the city of Pond Creek.

¶3 At the time of the hearing before the Commission, the appellee company had about 71 telephones in the city of Pond Creek and 14 rural telephone lines diverging therefrom and extending over Grant and Garfield counties. By connections with the appellant, the appellee, for its members, could obtain connections for long-distance purposes.

¶4 M. D. Sullivan, a witness on the part of the appellee, testified in part as follows: "Q. How many phones have you in the town of Pond Creek? A. Seventy-one, and I expect in a few days to have 20 or 25 more. Q. What are the rates you are charging there? A. $1 for business phones, and 50 cents a month for residence phones. Q. What are you charging for your rural line? A. Twenty-five cents a month. Q. How many subscribers have you on those lines? A. All the way from 10 to 30. Q. And that number can be handled in a proper manner by making this long-distance connection which you are requesting the Commission to give you? A. Yes, sir; I am satisfied it can. *** Q. Now, what do you charge for the same? A. One dollar for business and 50 cents for residence phones. That is to the stockholders of the company. Q. Supposing a man is not a stockholder, then what? A. The company has refused to furnish phones as yet; but we have put in 3 or 4 phones. If a man will purchase a phone, we will install. *** The phone will cost him $10. Q. Then the rates of the two phones are considerably different? A. Oh; yes. Q. That is the idea I wanted to get into my head. It is the plan to refuse, except to the stockholders? A. Why, I have got by-laws of this company in my pocket. When we organized this company, there were 75 business men and residents that agreed to subscribe $25 towards poling and wiring the town. That is pole and wire the town, and meet the rural lines at the city limits. *** Q. Up to date, the town subscribers in your company have paid $12 in subscriptions and $25 in stock for telephones? A. I do not understand your question. Those who subscribe pay $25; business men pay $1 for phone and private residents, 50 cents. Q. If they have stock in the company, they get their business phone for $1 and residence phone for 50 cents? A. Yes, sir. Q. So, for the first year, it will cost them only $18 for their houses and offices, plus $25 for the stocks? A. Yes, sir."

¶5 Section 5, art. 9, of the Constitution, is as follows: "All telephone and telegraph lines, operated for hire, shall each respectively receive and transmit each other's messages without delay or discrimination, and make physical connections with each other's lines, under such rules and regulations as shall be prescribed by law, or by any commission created by this Constitution, or any act of the Legislature for that purpose."

¶6 Section 2 of the same article also provides: "Every railroad, oil pipe, car, express, telephone or telegraph corporation or association organized or authorized to do a transportation or transmission business under the laws of this state for such purpose, shall, each respectively, have the right to construct and operate its line between any points in this state, and as such to connect at the state line with like lines; and every company shall have the right with its road or line, to intersect, connect with, or cross any railroad or such line."

¶7 A telephone company is a transmission company. Section 34, art. 9, of the Constitution.

¶8 Section 18 of article 9 of the Constitution, in part, provides:

The Commission shall have the power and authority to be charged with the duty of supervising, regulating and controlling all transportation and transmission companies doing business in this state, in all matters relating to the performance of their public duties and their charges therefor, and of correcting abuses and preventing unjust discrimination and extortion by such companies; and to that end the Commission shall, from time to time, prescribe and enforce against such companies, in the manner hereinafter authorized, such rates, charges, classifications, of traffic, and rules and regulations, and shall require them to establish and maintain all such public service, facilities, and conveniences as may be reasonable and just, which said rates, charges, classifications, rules, regulations, and requirements, the Commission may, from time to time, alter and amend, *** and shall, from time to time, make and enforce such requirements, rules and regulations as may be necessary to prevent unjust or unreasonable discrimination and extortion by any transportation or transmission company in favor of, or against any person, locality, community, connecting line, or kind of traffic, in the matter of car service, train or boat schedule, efficiency or transportation, or transmission, or otherwise, in connection with the public duties of such company.

¶9 1. It is insisted by the appellant that the appellee telephone company is not operated for hire, and for that reason the Commission has not jurisdiction to make the order complained of. In Hine v. Wadlington et al., 26 Okl. 389, 109 Pac. 301, it is said: "The only character of telephone line, whether owned by an individual, company, or corporation, excluded from the jurisdiction of the Corporation Commission is that not operated for hire."

¶10 In Twin Valley Telephone Co. v. Mitchell et al., 27 Okl. 388, 113 Pac. 914, it is said: "Only telephone lines ‘operated for hire' are placed by article 9 of the Constitution under the jurisdiction of the Corporation Commission. Rural or farmers' lines operated on the mutual plan, without any charges or toll for use of the line, are not subject to regulation by the commission."

¶11 This exemption was inserted at the instance of the representatives of the mutual companies which had been organized in rural communities, not for the purpose of profit, but for the mutual conveniences of the members thereof. If the appellees' telephone company is operated for hire, it then becomes subject to the control of the Commission, where it may be required to furnish reasonable conveniences and facilities for a fair and just compensation to the patronizing public. The appellee in its complaint does not claim to be in that class of telephone companies operated for hire. Nor are we satisfied from the evidence that it comes within such class. If so, every person desiring service, conveniences, and facilities can require the company to furnish the same, without discrimination, for a fair and just compensation. But the Commission certainly has jurisdiction over the appellant telephone company, and may require it to furnish all reasonable public service, conveniences, and facilities to the patronizing, or would-be patronizing, public at a fair and just charge or remuneration. The appellee telephone company, if operated for hire, under section 5, supra, is entitled to physical connection as prayed for, but if not, as contended by the appellant, still it would be entitled to have the appellant to furnish to it all public service, facilities, and conveniences for a just and fair consideration or remuneration, as much so as any other patron.

¶12 Suppose a firm engaged in any business authorized by law, composed of 12 partners having their offices in 12 different places, should make application to the appellant for long-distance service and for phone connections with its long-distance lines, in order that such service might be afforded to said firm and all of its members, could it be successfully contended that the Commission did not have power and authority to require such service, conveniences, and facilities to be afforded by appellant to such patrons for a fair and just remuneration? We think not. What is the difference between a mutual telephone company in point of fact and such firm? A mutual telephone company is composed of many members, and when it makes application to the appellant for long-distance service for each of its members, said mutual company to pay for such service, facility, and convenience, we think the Commission has the authority to require such connection to be made, and for such service to be performed at all times, the appellant, however, to have just and fair compensation for the service to be performed and the facilities or conveniences furnished.

¶13 The order of the Commission, however, required the installation of all necessary equipment for the connection of the office of the appellee telephone company with the long-distance office of the appellant telephone company, and that said appellee should bear the cost of such apparatus installed in its office, and the appellant to pay for the installation of the necessary apparatus in its office for the connection between the two offices. This order must be modified to the extent that the appellee telephone company be required to pay all the expenses of the installing of said equipment, whether in the office of the appellee or the appellant telephone company, but in all other respects, where the order of the Commission is in accordance with this opinion, it must be affirmed. See, also, Corporation Commission v. Southern Ry. Co., 153 N. C. 559, 69 S.E. 621.

¶14 The control of telephone companies has been the source of litigation in other jurisdictions. See Central Union Telegraph Company v. Falley, 118 Ind. 194, 19 N.E. 604, 10 Am. St. Rep. 114; Billings Mutual Telephone Co. v. Rocky Mountain Bell Telephone Co. (C. C.) 155 Fed. 207; Cumberland Telephone & Telegraph Co. v. Kelly, 160 Fed. 316, 87 C. C. A. 268, 15 Am. & Eng. Ann. Cas. 1210.

¶15 2. It is insisted that the order of the Commission constitutes the taking of the property of the appellant without just compensation, and without due process of law, and denies it the equal protection of the laws, and is in contravention of the Constitutions of Oklahoma and of the United States. The order of the Commission is, in part, as follows:

The Commission finds from the evidence that to connect the exchange of complainant with that of the defendant would require some additional equipment for that purpose, and would incur some expense. The complainant, it appears, is willing to bear this expense necessary for the furnishing of reasonable equipment for the service desired. The complainant further concedes that all reasonable rules of the defendant in the transaction of its business should be complied with, and that the defendant should receive from the subscribers of the complainant the same amount of consideration for the transmission of long-distance messages that it receives from the subscribers of its own exchange at Pond Creek. The Commission finds from the evidence that physical connection between the exchange of complainant and defendant can be made without impairing the service of the defendant's local exchange or long-distance lines; that the circuit may be installed, one terminus being in the exchange of the defendant, and the other terminus in the exchange of complainant, with proper equipment supplied in both exchanges. The Commission finds from the evidence that the supervision of the traffic can best be handled at the defendant's exchange, and that such rules and methods for handling such traffic as now prescribed by the defendant are not unreasonable. It is therefore ordered that the defendant, the Pioneer Telephone & Telegraph Company, install in the exchange of complainant and its own exchange, in the town of Pond Creek, such special apparatus as may be necessary for the operation and interchange of service, and construct between the said exchange a line to connect said apparatus, and immediately upon completion of same shall receive and transmit long-distance messages for the subscribers of the complainant and those having connection with the exchange of the complainant over the lines of the defendant to any point reached by the defendant's toll lines or connections; that said equipment shall be installed on or before the 15th day of September, 1909; and that the complainant shall pay the actual cost of the material and the installation of this connection for all apparatus used in complainant's exchange, and the defendant shall supply and install, at its own expense, all apparatus necessary to make the proper connection in its own exchange, and the complainant shall pay for the installation and wire between the exchanges. After this connection shall have made, any gross, inadequate, or willful refusal to serve the patrons of those calling for long-distance connections through the exchange of the complainant will be considered by the Commission a violation of this order, and all rules and regulations imposed by the defendant upon the complainant shall be subject to the approval of the Commission before the complainant will be bound thereby, being understood that the present operating rules of the defendant are considered reasonable and binding, and the above has reference only to changes made in the regular system now in force."

¶16 The Commission, under the provisions of sections 2, 5, and 18 of article 9 of the Constitution of Oklahoma, is authorized to make such order as heretofore indicated by us, provided it is reasonable and just. The rules and charges of the appellant theretofore in force are continued by this order. Certainly the appellant cannot be heard to complain, when the rules and charges applied by it to the public generally are made by the Commission to also apply to appellee. The appellee must pay all these charges for its different members, just as a firm must pay the charges for its different members. As to whether the different members of the firm make a contribution into the partnership fund by way of reimbursement, or whether the members of the mutual company make a contribution into the general fund by way of reimbursement, with that the appellant has no concern. The fact that the appellee company is composed of many citizens, who formed a co-operative or mutual plan, by which they maintain their lines to and from their residences or places of business to a common point, and there have an agent or operator representing them, and cause connections to be made with appellant's long-distance line for the convenience of said members of this company, but not for hire or profit, is not just ground for complaint on the part of appellant. However, the appellee company must pay a just and fair charge for all service, and compensate for all facilities and conveniences. The appellant company being a domestic corporation, every provision of sections 2, 5, and 18 of article 9 of the Constitution becomes a part and a condition of its charter. Noble State Bank v. Haskell, 22 Okl. 48, 97 Pac. 590; Missouri, Oklahoma & Gulf R. Co. v. State et al., 119 Pac. 117, recently decided by this court, but not yet officially reported; Hammond Packing Co. v. Arkansas, 81 Ark. 519, 100 S.W. 407, 1199, 126 Am. St. Rep. 1047; Id., 212 U.S. 322, 29 Sup. Ct. 370, 53 L. Ed. 530; Ozan Lumber Co. v. Biddie, 87 Ark. 587, 113 S.W. 796; Leep v. Railway Co., 58 Ark. 407, 25 S.W. 83, 23 L. R. A. 264, 41 Am. St. Rep. 109; Union Sawmill Co. v. Felsenthal, 85 Ark. 346, 108 S.W. 217; Arkansas Stave Co. v. State, 94 Ark. 27, 125 S.W. 1001, 27 L. R. A. (N. S.) 255, 140 Am. St. Rep. 103; New York Cent. & H. R. R. Co. v. Williams, 199 N.Y. 108, 92 N.E. 404, 139 Am. St. Rep. 850.

¶17 In Norfolk & Portsmouth Belt Line Co. v. Commonwealth, 103 Va. 289, 49 S.E. 39, it is said:

The principle upon which the state assumes authority to control and regulate the affairs of railroads and other public service corporations rests largely upon the doctrine of agency. Such corporations are founded by the Legislature for public purposes, and are clothed with authority, subject to state regulation and control, to exercise important governmental functions. By their charters, they are granted privileges which may not be exercised by private persons, whether individuals or corporations, but always with the reservation, express or implied, that such privileges are subject to reasonable governmental control. Cal. v. Pac. R. R. Co., 127 U.S. 40, 8 Sup. Ct. 1073, 32 L. Ed. 150. This right of control is part of the police power of the state.

As was said by this court in the City of Petersburg v. Petersburg Aqueduct Co., 102 Va. 654, 47 S. E. 848: ‘Bearing in mind the distinction between public and private corporations in the matter of public control, that the former are regarded as instrumentalities of the state, and liable to visitation and regulation, while the charters of the latter are contracts, within the meaning of the contract clauses of the state and federal Constitutions, the obligation of which, in the sense of those clauses, cannot be impaired, *** nevertheless the police power of the state is a governmental function, the exercise of which neither the Legislature nor any subordinate agency thereof, upon which part of its authority may have been comferred, can alienate or surrender by grant, contract, or other delegation. Richmond, etc., Co. v. Richmond, 67 Va. 83, s. c., 96 U.S. 521, 24 L. Ed. 734; Boston Beer Co. v. Massachusetts, 97 U.S. 25, 24 L. Ed. 989; Stone v. Mississippi, 101 U.S. 814, 25 L. Ed. 1079; Butchers' Union Slaughter House, etc., Co. v. Crescent City Live Stock Landing, etc., Co., 111 U.S. 746, 4 Sup. Ct. 652, 28 L. Ed. 585; Powell v. Pennsylvania, 127 U.S. 678, 8 Sup. Ct. 992, 32 L. Ed. 253. *** It follows, as a necessary consequence from the foregoing statement of the law, that there is an implied reservation of the police power of the state in every public charter granted by the Legislature.'

Governmental powers are conferred upon the state primarily by the people, in trust for the benefit of all of its citizens; and whether exercised by the government directly through its own officials, or indirectly through the agency of corporations chartered by the state, must be exercised impartially, and without discrimination, for the benefit of all the people. This is the basic principle upon which our government is founded, and the philosophy of the constitutional provision securing to every one the ‘equal protection of the law.'

‘A franchise is a right, privilege, or power of public concern, which ought not to be exercised by private individuals at their will and pleasure, but should be reserved for public control and administration, either by the government directly, or by public agents acting under such conditions and regulations as the government may impose in the public interest.' Cal. v. Pac. R. R. Co., supra.

Railroads are public highways, and in this age of advanced civilization are as essential to the life of the state as ordinary roads and streets are to the existence of rural and urban communities. The very existence of public corporations, as well as their power to exact fares and freights, is derived from the state; and it cannot be deprived of its superintending power over them. Cherokee Nation v. Kansas R. R. Co., 135 U.S. 657, 10 Sup. Ct. 965, 34 L. Ed. 295; L. & N. R. R. Co. v. Kentucky, 161 U.S. 696, 16 Sup. Ct. 714, 40 L. Ed. 849; Smyth v. Ames, 169 U.S. 544, 18 Sup. Ct. 418, 42 L. Ed. 819; Wis., etc., Co. v. Jacobson, 179 U.S. 297, 21 Sup. Ct. 115, 45 L. Ed. 194.

In Lake Shore, etc., R. R. Co. v. Ohio, 173 U.S. 302, 19 Sup. Ct. 465, 43 L. Ed. 702, it was said: ‘In the recent case of Jones v. Brim, 165 U.S. 180, 17 Sup. Ct. 282, 41 L. Ed. 677, it was adjudged that embraced within the police power of the state was the establishment, maintenance, and control of public highways there, and under such power reasonable regulations incident to the right to establish and maintain such highways could be established by the state.'

In this commonwealth, the State Corporation Commission, created by constitutional authority, is the instrumentality through which the state exercises its governmental powers for the regulation and control of public service corporations. For that purpose, it has been clothed with legislative, judicial, and executive powers. Subsection ‘b' of section 156 of the Constitution [Code 1904, p. cclii] declares that ‘the commission shall have the power, and be charged with the duty, of supervising, regulating and controlling all transportation and transmission companies doing business in this state, in all matters relating to the performance of their public duties and their charges therefor, and of correcting abuses therein by such companies; and to that end the Commission shall from time to time prescribe, and enforce against such companies, in the manner hereinafter authorized, such rates, charges, classifications of traffic, and rules and regulations, and shall require them to establish and maintain all such public service facilities and conveniences, as may be reasonable and just, which said rates, charges, classifications, rules, regulations and requirements the commission may from time to time alter and amend.' ***

If the power of the commission is limited merely to fixing the rate for carriage, and it is without authority to so regulate that service as to render it effective, it is obviously wholly inefficacious with respect to this large class of consignees and shippers."

¶18 In that case the order of the State Corporation Commission of Virginia, fixing the charge for placing cars in position to be weighed on the consignees' or shippers' individual track scales, located on sidings leading to industries along the line of appellant's railroad, at 25 cents per car for each car, loaded or empty, so placed in position and weighed, was assailed by the railroad company, on the ground that the Commission had no authority to fix the charge. The court held that the service in question was cognate to and so intimately connected with the public service involved in the carriage and delivery of freight by the railroad company to patrons along its route as to constitute a part of such service, and consequently subject to governmental control. And, further, that wherever the service required fell within the category of a public service, within the meaning of the provisions of said Constitution, which are a prototype of the public service corporation provisions of our Constitution, the Corporation Commission had authority to regulate the same. It was further declared that the duties of a common carrier may arise out of usage, as well as from statutory enactments, and when once established the obligation of such carriers to perform them is as binding in the one case as the other, and that in that case the evidence showed that it was the custom of the appellant, as well as other railroad companies, under similar conditions, to render such service for their customers as an incident to the carriage and due delivery of their freight.

¶19 Under the provisions of the Constitution of this state, the appellant telephone company is a public service corporation, subject to the same regulations as a railroad company. It is common usage for appellant, and other telephone companies in this state, to place telephone booths and switchboards in hotels and other places, where there is sufficient demand for long-distance service. The fact that the appellee telephone company, not organized for profit or hire, but for the convenience of rural residents, in order that they may as cheaply as possible have telephone connections with the urban and commercial world, may result in curtailing the field for appellant's operation and gain is no reason why the service, facilities, and conveniences shall not be afforded to said appellee for a fair and just compensation. When appellant procured its charter and its franchise to engage in this public service business, it did it with the full knowledge that it thereby became an agency of the state, subject to its control and regulation, under the exercise of its police power, for the comfort and convenience of the citizens of the state (31 Cyc. 902), subject to the condition that appellant's property should not be taken, except by due process of law. When a fair and just compensation is afforded for such convenience, facility, and service, that constitutional requirement is satisfied. The order of the Commission, as modified, must be affirmed.

TURNER, C. J., and DUNN, HAYES, and KANE, JJ., concur.